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Heymann Company bonds have 4 years left to maturity. Interest is paid annually, and the bonds have a $1,000 par value and a coupon rate of 9 percent.

a. What is the yield to maturity at a current market price of (1) $829 or (2) $1,104?

b. Would you pay $829 for each bond if you thought that a "fair" market interest rate for such bonds was 12 percent-that is, if rd = 12 percent? Explain your answer.

Financial Accounting, Accounting

  • Category:- Financial Accounting
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